Q4 2023 Ligand Pharmaceuticals Inc Earnings Call

Participants

Octavio Espinoza; Chief Financial Officer; Ligand Pharmaceuticals Inc

Todd Davis; Chief Executive Officer; Ligand Pharmaceuticals Inc

Matt Korenberg; President & Chief Operating Officer; Ligand Pharmaceuticals Inc

Matt Hewitt; Analyst; Craig Hallum

Lawrence Solow; Analyst; CJS Securities

Balaji Prasad; Analyst; Barclays

Presentation

Operator

Ladies and gentlemen, thank you for standing by, and welcome everyone to the Ligand Fourth Quarter 2023 earnings webcast.
At this time, all lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session. If you'd like to ask a question during this time, simply press the star followed by the number one on your telephone keypad. If you'd like to withdraw your question, please press the star followed by the one.
Once again. Thank you. I will now hand the call over to Teva Aspen dozer, Chief Financial Officer. You may begin your conference.

Octavio Espinoza

Hello, everyone, and welcome to our earnings call for the fourth quarter and year-end 2023. During the call today, we will review the financial results we released prior to today's market opens and offer commentary on our partnered pipeline and business development activity, after which we will host a question and answer session. Our earnings release can be found in the Investor Relations section of our website at Ligand.com. Participating for Ligand today will be our CEO, Todd Davis, our CFO, Matt Korenberg and myself, Tabula Rasa, CFO. This call is being recorded and the audio portion will be archived in the investor section of our website. It is our intent that all forward-looking statements regarding our financial results and commercial activity made during today's call will be protected under the Private Securities Litigation Reform Act of 1995. Forward-looking statements are subject to risks and uncertainties. Actual events or results may differ materially from those projected or discussed. Our forward looking statements are based upon current available information and Ligand assumes no obligation to update these statements to better understand the risks and uncertainties that could cause actual results to differ. We refer you to the documents that Ligand has filed with the Securities and Exchange Commission, including our most recent Forms 10 Q and 10 K.
With that, I will now turn the call over to Todd.

Todd Davis

Thank you, cabo, and welcome to everyone on the call. The end of 2023 marks the completion of my first full year as CEO of Ligand. And I'm happy to say that in the last year, we've successfully transformed the company to take ligand to the next stage of growth.
Slide 3 summarizes our financial and portfolio achievements in 2023, which underscores our strong momentum and the strength of our business model First, we delivered strong financial performance. We grew revenue by more than 20% when you exclude last year's COVID-related Captisol sales, while reducing 2023 cash operating expenses from above $90 million per year to below $40 million per year. This resulted in core adjusted diluted earnings per share of $4.6, which is 66% above the prior year.
Second, we streamlined and improved the financial profile of the business through restructuring efforts. In addition to spinning out the OmniAb business, we also divested our Pelican protein expression platform via equity merger or spin out to form Primrose Bio. Both of these businesses are our valuable technology platforms, but they require additional investment in infrastructure that was inconsistent with our core financial strategy. This enabled a headcount reduction from over 170 to 35 employees. This operational streamlining was completed even while adding significant talent in the investment portfolio management and diligence functions to create a premier investment team. Accordingly, that team began to execute on our newly defined refined strategy in the second half of 2023.
Third, we strengthened our royalty portfolio by adding several innovative and exciting new programs, including Sanofi's T's yield and Takeda's soticlestat. We also expanded existing partnerships acquiring full rights to the recently approved sale sued me and expanding a royalty investment in palbo PTX. zero to two program, which is in development for Micrus cystic lymphatic malformations.
Fourth, as shown on slide 4, at our Investor Day in December, we announced for the first time a longer-term outlook where we see royalty revenue kegger of over 20% and an adjusted EPS kegger exceeding 25% over the next five years. The breadth of our asset portfolio provides us with a lower volatility and much greater predictability than is typical in biotech businesses, which in turn provides us the confidence to share these longer-term projections. The forecast is driven by our current major commercial programs, our existing pipeline and the expected contribution from the new business development efforts, KaVo will cover our financials in a little more detail, but I'd like to highlight that the increase in Viking Therapeutics stock price in 2023 has bolstered our balance sheet as we generated approximately $80 million in proceeds from the sale of Viking shares and still hold approximately 1.7 million shares. We are reinvesting these proceeds into new investments that will drive additional growth and value creation in the future.
Also, there are several exciting developments across our partnered commercial portfolio and clinical pipeline during late 2023 and early 2024, and there's an opportunity for further value creation through additional important catalysts expected this year on January 5, 2024r the FDA approved Zelle suit me as a first-in-class medication for the treatment of molluscum molluscum, contagious and in adults and pediatric patients, one year of age or older. Your food made is the first and only prescription medication that can be applied by patients, parents or caregivers at home outside of the physician's office to treat this highly contagious infection. You may recall that we own 100% of Zelle, certainly rights after funding November through a restructuring process and acquiring a significant portion of their assets in 2023. Additionally, we have two partnered products that have produced to date scheduled during June of 2024 for Otis ensifentrine and Merck's D. one one six and suspension rate, if approved, is expected to be the first novel mechanism available for the maintenance treatment of COPD in more than 10 years. Additionally, the FDA accepted for priority review Merck's new BLA for V. one one six, an in-depth investigational 21 valent pneumococcal conjugate vaccine, specifically designed to help prevent invasive pneumococcal disease and pneumonia in adults. Our royalty rates on ensifentrine and D. one one six are in the low single digit royalty range.
Finally, trivia announced that it received 459 new patient start forms for Phil sorry, in the fourth quarter of 2023 and announced net product sales of approximately $15 million for the fourth quarter, which is an increase of over 80% from the prior quarter. We have a 9% royalty until story and consensus estimates continue to show $500 million to $1 billion in peak sales party sales shortly. Matt will provide more detail around these and other programs.
Now let's turn to our business development efforts in 2023. One of our key priorities was assembling a strong and experienced investment team to execute on our strategy, and we are pleased with our progress in this regard. Additionally, I can share today that we recently added rich Baxter and Dr. Karen Reeves to the team. Rich joins us as SVP of investment operations and a member of the Investment Committee. Rich brings significant commercial pharmaceutical industry experience and private equity investment experience co-founded the healthcare group for Drawbridge Special Opportunities Fund at Fortress Investment Group, which invested approximately $1 billion in emerging life science companies. He also served as co-head of the healthcare team at Hastings Capital Management, which deployed $1.4 billion in capital over four years. Cameron is a board-certified physician and joins us as SVP of Clinical Strategy and Investments. She brings more than 20 years of experience in senior roles at top pharmaceutical companies with extensive experience in successful Phase one through Phase four drug development across multiple therapeutic areas. Most recently, he served as President and Chief Medical Officer of AZ therapies, a private late-stage clinical biopharmaceutical company focused on neurology prior to AZ therapies. Karen held multiple leadership positions at Pfizer, including DP., worldwide R & DZP., worldwide safety and regulatory and Head of Global Clinical submissions for quality. Welcome both current and rich to the Ligand team Paul had and has been leading our investment origination efforts and was instrumental in increasing our available opportunity set during 2023. Last year. We reviewed over 300 investment opportunities, signed 45 CDAs and closed five transactions. We entered 2024 with $130 million in cash plus. We expect to generate approximately$ 80 million in cash from operations this year. Adding to this is our ownership in Viking Therapeutics stock at a $75 million revolving credit facility. With this strong financial position, we feel we are well positioned to have another successful year led by investment activity, providing exciting growth opportunities ligand. As we discussed in December, the team has built a robust pipeline of investment opportunities that span both significant breadth of therapeutic area, but also diversified transaction types. We are in active dialogue with multiple counterparties and are constantly looking for new exciting opportunities for which to invest capital. The team is currently reviewing approximately $1.4 billion in investment opportunities across multiple strategies, including royalty monetization, project finance, M&A, and special opportunities as a reminder about our investment criteria, we are primarily focused on assets that are within a few years of approval in either Phase two or Phase three. Our highly differentiated offer significant value to patients provide favorable market exclusivity. It has above average probability of technical and regulatory success. Ultimately, the number and size of investments we make will depend on the quality of the opportunities we identify, and we believe that we have the right team to execute and excel in this high-margin, high-growth strategy. It's important to note that the majority of our diligence assessment is done under confidentiality agreements, which provides us advantageous insight into our investment decisions.
So in summary, 2023 was an important year for Ligand in terms of our financial performance, strategic evolution, investment activity and team building efforts. With these accomplishments, we're looking forward to a busy and productive 2020.
For now, Matt will cover the portfolio highlights.

Matt Korenberg

Thanks, Todd, 2023 was a transformative year for Ligand. And today, I'll provide investors with an update on key developments from our partners across our commercial programs in our development portfolio, Ligand's portfolio includes more than 85 partnered programs that drive our royalty revenue, our Captisol material sales and our license milestone and contract revenue.
Slide 10 shows our key commercial programs that drive are the significant majority of our royalty revenue. Our current commercial portfolio includes over 25 different royalty streams and 30 commercial drivers. Overall, the eight programs are expected to contribute over 95% of the royalty revenue in 2024. The team at Ligand is focused on adding additional names to this list. Many of those additions will come organically from our existing partnered pipeline portfolio and some will come through new investments generated out of our now established field team.
As Todd mentioned, a few highlights from 2023 Prolaris, which is an important drug for multiple myeloma, continued its strong performance with another solid quarter in Q4. It product marketed by Amgen in a majority of the countries around the world as well as by Ono in Japan and by Beijing in China.
For Q4 2023, these companies reported combined quarterly revenue of over $370 million year over year. Growth for the product was driven principally by volume growth for 2023, reported sales exceeding $1.4 billion globally, we earn a tiered royalty of 1.5% to 3% on global sales and expect continued growth in 2024. Our partner, Servier as marketing field bar in the US in IGA nephropathy, Trevi reported revenue of $14.7 million for Q4, which we are also continuing to disclose the momentum on new patient recruitment. Severe had 459 new patient flow submitted in Q4 bringing the total since launch to 1,452. The continued addition of potential new patients provides good evidence of future revenue potential that supports the consensus estimates for 2024?
Sure. At approximately $110 million of revenue for the year. On the regulatory front, Premier announced that the EMACHMP. has recommended approval for surface, our Santen for the treatment of adults with primary IGA nephropathy. The Company expects the EU approval decision in Q2 2024 and the full U.S. approval decision in Q three 2024, we earned a 9% royalty on net sales, and we expect that this will be a significant driver of our long-term growth for royalties. Rylaze is marketed by our partner, Jazz Pharmaceuticals as a component of a multi-agent chemotherapeutic regimen for the treatment of children and adults with ALL or LBL. This product continues to do extremely well in a market that was previously constrained by supply issues at JPMorgan.
Earlier this year, Jazz highlighted rights as one of its three key growth drivers having received approval for Rylaze in Europe in September 2023, just to confirm, the first European country launch occurred before the end of last year, and that additional European launches will continue on a rolling basis in 2024. In Q3 of 2023, Rylaze generated $104.9 million in sales. We look forward to any program updates in the Jazz Q4 sales report coming later this week, back in advance of the pneumococcal vaccine utilizing Ligand's Kremlin 97 vaccine carrier protein produced using our former Pelican Expression Technology platform work is now marketing back to events in both the adult population and the pediatric population, where we announced a $176 million in back-to-base sales in Q4 2023. For the full year, sales for the product came in at $665 million. Ligand earns a low single-digit royalty on vaccine sales.
Turning to slide 11, we list a selection of our partnered pipeline products that will have meaningful clinical or regulatory catalysts in the coming year. The first program on the list of Zeltiq flying and acquire this product through our Novion acquisition in 2023, subsequently receive approval for the program on January fifth, 2024. So soon is approved for the treatment of Alaskan contagious in adults and pediatric patients, one year of age or older, consuming the first and only topical prescription medication can be applied by patients, parents or caregivers at home outside of a physician's office or other medical settings, and it's used to treat this highly contagious viral skin infection team is extremely excited about the potential for this program for a process of building a new stand-alone company called Pelto therapeutics that will commercialize Delta company creation effort is very similar to our prior efforts related to Viking Therapeutics and Primrose bio Pelto. So the operative fully independent of Ligand. So we expect to own a significant equity stake in the business and inception file. While we are having discussions with potential strategic licensing partners, we're also making good progress towards the creation of health, those in the launch of bill, certainly we expected those ones. You'll see me in late 2024, and the program will join our key contributors to Ligand's royalty revenue line. Corona submitted its NDA to the FDA in June 2023 for approval of ensifentrine for the maintenance treatment of patients with COPD certificate for the product's been established as June 26th, 2024. And Verona is building its commercial infrastructure as we speak by again benefits from a low single-digit royalty on ensifentrine and we believe the program will be another of our key growth drivers as factories are first in class drug candidate using a novel mechanism of action, combining dual inhibition of PDE. three and PDE4 our own estimates that there are over 8 million COPD patients currently receiving chronic treatment in the US alone, over half of whom are dissatisfied with their current treatment regimen. If approved, intervention could offer an effective and highly safe and tolerable add-on or alternative treatment to address both symptoms and exacerbations markets.
Developing B. one one six, as part of its pneumococcal vaccine franchise fuel and six is targeted specifically at adults has shown benefits over the existing standard of care after reporting positive Phase three data last year in June in filing the BLA in November. There's now the due for date of June 17th, 2024. For successful approval, we believe be one one six will continue to drive the Merck franchise growth benefit ligand through our low single digit royalty work received breakthrough therapy designation for V1 six, and if approved, fuel and six will be the first pneumococcal conjugate vaccine, specifically designed to address the serotypes that cause post adult invasive pneumococcal disease. Kate is developing soticlestat, which is a first-in-class novel compound with the potential to reduce seizure susceptibility to Kate is currently running two Phase three trials and expect data in its fiscal year 2020. For 5G. Nr is a tiered royalty of up to 22.6% on this drug if successfully commercialized as well as up to $86 million of milestones. There remains high unmet need in rare pediatric epilepsies and soticlestat is uniquely positioned to deliver value to patients and caregivers through its demonstrated seizure reduction capability as well as its strong safety profile and ability to be combined with a broad range of antiepileptic treatments.
Finally, during the second quarter of 2023, Viking announced positive top line results from the Phase IIb VOYAGE study evaluating DK. to eight oh nine in patients with biopsy-confirmed NASH and we expect to report data from the secondary and exploratory objectives of the VOYAGE study, including the evaluation of histologic changes assessed by Empatic biopsy over 52 weeks of treatment, a first half of 2024. We expected following these results, Viking, we move forward into Phase three with this important program by going into 3.5% to 7.5% royalty on potential sales of DK. to eight oh nine as well as significant clinical regulatory and commercial milestone. Nash is a very large potential market. And if Mike is successful in their development products in this category are estimated to be multibillion-dollar dollar opportunities.
On Slide 10, I'll provide sorry, excuse me on Slide 12. I'll provide an update on our Captisol business forecasts of sales for 2023 outperformed our expectation for the year. Customer demand remains strong for both clinical and commercial Caphosol as partners continue to find benefit from our technology platform, 2023. So six new partner agreements. We've already signed a few more in 2020. For last month, we saw Eisai announced the approval of the IV formulation of their drug by complex that marks the 16th approved Captisol-enabled drug around the world. And we see the potential for another four approvals in 2020 for traction on this business as exemplified by the number and pace of approvals as well as the volume of material that we've sold since acquiring the business.
In addition to highlighting the names of all 16 approved drugs along with our timing of approval. A chart on the right shows vertical bars annually that represent the cumulative volume of Captisol that we sold. It demonstrates the continued momentum of the business. We report our Captisol sales on a separate line from our royalties businesses, another of our major drivers of revenue, cash flow and profitability. Gross profit from capsule in 2023 equated to about $17 million, which exceeded our largest single current single royalty other than Kyprolis.
That concludes my summary of before portfolio highlights, and I'll turn the call back over to David for a financial update.

Octavio Espinoza

Thanks, Matt. First, I want to highlight that I will be discussing non-GAAP results, which exclude certain items, including stock-based compensation, amortization of intangible assets, unrealized gains from short-term investments, our share of losses absorbed from accounting or invest our investment in Primrose bio under the equity method expenses incurred to incubate the recently acquired Nova business amongst others.
In addition to help investors discern the performance of our core business results, we subtract Caphosol sales related to COVID-19 and realized gains from the sale of Viking Therapeutics stock. I encourage you to review the GAAP reconciliation of these non-GAAP measures, which can be found in today's release available on our website.
We delivered strong results in 2023 that met or exceeded the high end of our guidance range with total revenue of $131 million and core adjusted earnings per share of $4.6. We ended the year with $170 million in cash and investments and no debt on the balance sheet.
Slide 14 frames of our financial results in more detail for both the fourth quarter and the full year. I'll focus my discussion first on the full year results. Excluding last year's contribution from COVID, Captisol sales total 2023 revenue grew 21% versus 2022. Royalty revenue increased 16% to $83.9 million from $72.5 million a year ago was the growth driven by strength in Amgen's Kyprolis?
Yes, it's Rylaze and Merck's of X new events, the increase in royalty revenue was offset by a decrease in teriparatide. We have been anticipating generic competition to enter the market, and it appears that may beginning to materialize. Amgen reported totaled 2023 type product sales of $1.4 billion which was 13% above the prior year and the attributed most of the increased volume growth. Merck announced total sales of $665 million It prevents new events, which is an almost 300% increase over 2022. We believe these products, along with Rylaze until Spark, will continue to drive royalty revenue growth in the future.
Captisol sales were $28.4 million in 2023 versus core Captisol sales of $16.4 million in 2022, but the increase due to timing of customer orders. Total Captisol sales in 2022 or $104.5 million was $88.1 million of that related to COVID-19. We did not have any COVID-19 related Captisol sales this year. Contract revenue this year was $19 million versus $19.2 million in 2022. Total R&D and G&A operating expenses decreased by 27% in 2023 to primarily to lower headcount related expenses associated with the spin out of Pelican. A decrease in operating expenses was offset by investments made to build up our investment team in Boston as well as the increase in expenses associated with the incubating the narrowband business.
G&a and R&D expenses were $52.8 million and $24.5 million in 2023 versus $70.1 million and $36.1 million in 2022, respectively.
Gaap net income in 2023 was $53.6 million or $3.2 per diluted share versus GAAP net loss of $5.2 million or $0.31 per share in 2022. The increase in GAAP net income is due largely to the increase in operating income and gains from short-term investments due to the increase in value on our holdings of Viking stock. Excluding the impact of gains from sales of Viking stock and COVID-19 Captisol sales, core adjusted net income was $71.6 million or $4.6 per diluted share in 2023 versus $41.9 million or $2.44 per diluted share in 2022. Adjusted net income for 2023 was $107.3 million or $6.8 per diluted share, compared with $82.2 million or $4.79 per diluted share in 2022
To now focusing on the quarter, our revenue for the quarter increased about 5%, excluding COVID-19. Captisol sales in Q4 2020 to royalty revenue overall increased slightly, driven by progress Rylaze back new bands and sales, partially offset by a decrease in teriparatide. Total operating expenses are lower compared to the prior year quarter, a large part due to the spin out of Pelican, offset by investments made and building up our investment team in Boston as well as costs associated with the narrowband business. As mentioned on our third quarter earnings call, we expect to incur incremental operating costs associated with incubating the Noven business. Our intent is to spin out and or out-license I know van business and therefore, we are adjusting out these expenses for purposes of reporting adjusted non-GAAP earnings.
Gaap net income for the fourth quarter of 2023 was $18 million or $1.2 per diluted share versus GAAP net loss of $14.5 million or $0.86 per share in the fourth quarter of 2022 the increase in GAAP net income is due largely to gains from short from short-term investments as a result of the increase in value on our holdings of Viking stock as well as lower operating expense, excluding the impact of gains from Viking stock and COVID-19 capital sales or adjusted net income was $18.5 million or $1.5 per share in Q4 '23 versus $13 million or $0.75 per share in Q4 '22. Adjusted net income for the fourth quarter of 2023 was $24.3 million or $1.38 per share, compared with $43.5 million or $1.36 per share in the prior year quarter.
Turning to the balance sheet. As of December 31, 2023, cash and short-term investments, $170 million, which includes $32 million of our holdings in Viking common stock expect that current cash plus annual cash flow generation will be sufficient to fund the investment and activity we anticipate over the foreseeable future.
Turning now to guidance. On Slide 15, we are reaffirming the 2024 financial guidance we introduced at Investor Day in December. We expect 2024 royalty revenue will be in the range of $90 million to $95 million, sales of Captisol sales in the range of $25 million to $27 million and contract revenue in the range of $15 million to $20 million. These revenue components result in total revenue guidance of $130 million to $142 million and adjusted earnings per diluted share of $4.25 to $4.75. And as Todd mentioned, we also introduced in December for the first time, and we reiterate today a longer-term outlook where we see royalty revenue growing at a compound annual growth rate above 20% from 2022 to 2028 and adjusted core EPS growing even faster at a compound annual growth rate above 25%. As a reminder, if you exclude Captisol for COVID-19 related sales from guidance, and we'll update investors as orders are received and shipped each quarter.
Finally, I'd like to direct listeners to our fourth quarter earnings press release issued earlier today, which is available on our website for a reconciliation of our adjusted financial results to the GAAP results I talked about today. I'll now turn the call over to Todd for closing comments.

Todd Davis

Thank you, Thiago. In summary, we are very pleased with our 2023 financial results as well as the progress we've made over the last year, improving our investment capabilities and growing our asset portfolio. Our diversified portfolio, including our major commercial royalty generating program, our late-stage pipeline form the foundation for compounding growth. This portfolio provides us with substantial cash flow to reinvest in new high value enhancing royalty opportunities. We are well positioned to execute against our goals in 2024 and deliver attractive growth and shareholder returns over the long term.
Thank you to everyone for joining us for today's earnings call, and we will now pass it back to the operator and open it up for questions.

Question and Answer Session

Operator

Thank you, sir. If any participant would like to ask a question, please press star followed by the number one on your telephone keypad. We'll pause for just a moment to compile the Q&A roster. Our first question comes from the line of Matt Hewitt from Craig-Hallum Capital Group. Please go ahead.

Matt Hewitt

Good morning and congratulations on the strong finish to the year. I guess several different from maybe the first one regarding the pencils on opportunity. How should we be thinking about timing and potential structure of our partnership? Or what are your intentions with that operating asset?

Matt Korenberg

It's Batam, yes. So it has some very similar to what we've done in the past, creating permit was filed recently and back in 2014, 15, creating Viking and then eventually spinning out Viking as a standalone company. And in 2015 with the IPO, one of the things that we're pursuing with the Nova and assets is creating this company called Health, those therapeutics that is just getting started. That will create as a stand-alone independent company. And we will seek external capital to fund at least a portion of and then ligand would license it assets the same way. We license Viking four or five assets, and I set it up as a standalone company and some that companies will be I'm prepared to commercialize and launch the product later this year when the product's ready to be launched. So it's one avenue that we're exploring. And right now, it's the one that we think is pretty high probability, but we're exploring all alternatives, including a license of the asset to a strategic.

Matt Hewitt

Got it. That's helpful. And then regarding your contract milestone guidance for this year, $15 million to $20 million with to put due for dates in Q2, you should would it make sense to be factoring in a little bit more heavy weighting, if you will, in that quarter, maybe you kind of assuming one of the two has a positive outcome or how should we be thinking about the cadence for the contract revenues?

Octavio Espinoza

Yes. On top of taking a look, just to make sure we have the numbers correct. But as we've talked about, there's an approval milestone for on the defense marine asset, it is about USD5 million that will hit if it's approved in of June as expected. So other than that one one big milestone. I don't think there's anything else cavalierly others.

Matt Korenberg

There's the there's the severe European approval and a number of other milestones that we probability risk adjust. And and so so that we do take we do take the PDUFA dates into consideration in arriving at our range there, so.

Matt Hewitt

Okay, got it. And then maybe one last one for me. As far as you touched on this a little bit. Obviously, you've built out a really strong team to evaluate potential investment opportunities. You've got a nice backlog there funnel, if you will. As far as timing is concerned, is it really just about when the deals come together versus are you targeting, hey, we'd like to have two this quarter to next quarter. How should we thinking about the timing on those? Thank you.

Todd Davis

Yes, the timing on these has to be flexible because you want to make sure you get all the way through diligence and you don't have a deal done until you clear diligence and final term so that there is no there isn't any investment business. There will be periods where there's a lack of activity seemingly in terms of closes. And then there'll be periods where there's significant activity in terms of closes. But there's always this underlying deal activity going on where you're originating deals evaluating screening, taking a certain number of those that pass the screen into deeper diligence and then and without perfect predictability, a certain amount of those get to a close. So there's just a natural process to this, and we don't want to commit to closing a certain number of deals or certain timing within a year because you really want the flexibility to maintain investment discipline around that process.

Matt Hewitt

Got it. Right. Thank you.

Matt Korenberg

Thanks, Matt.

Operator

Thank you. Our next question comes from the line of Lawrence Solow from CJS Securities. Please go ahead.

Lawrence Solow

Hi, good morning. Larry works. Just a couple of questions. I guess I guess first question just on the you guys called it out on the royalties a little bit down versus Q. three and usually the tiering up. So you called out teriparatide as the driver behind that. Just curious, as you look out to 24 on a few moving parts here, does the teriparatide number in that guidance, does that is that much lower now or is there an offset to that? Had you kind of expected that I guess it was only a couple of months ago.
And then I guess just on the royalty outlook, I guess you kind of mentioned the first bar is concerned, this is like one 10. So I guess that you guys kind of assuming that number in your guidance, you can just give a little color on those couple of moving parts?

Octavio Espinoza

Yes. Thanks, Larry. I was the we're reiterating what we said in December, we learned a little bit more sense, including the the new the new consensus number for Phil, sorry, there's a little bit of upside there. We think that the drivers will continue to be Kyprolis that new advanced Rylaze and and we have been prudent on teriparatide and we continue to be a prudent going into into the year. So we've we are seeing competition come in. We haven't received the full report yet from Allergan. So there's still more to be learned, but we have been conservative in our assumptions going in it.

Lawrence Solow

And you're not assuming anything for Brazil soon this year, correct.

Octavio Espinoza

No.

Lawrence Solow

Okay. And then just thoughts of Verona. Obviously, the product and severance is in their hands, but on and then you mentioned I think that they have gotten some financing to the current belief today is that they're going to they expect to launch that themselves. Obviously, COPD are a huge market and a lot of marketing expense and big pharma and they're dominated by big pharma. Is that something they're going to go up against? Are they actively looking for a partner?

Todd Davis

Yes, sorry, we have no, obviously specific knowledge on on their planned, but they have a strong team and have now over the last couple of years built built that up so that they have the ability to launch this themselves. And that is that is our assumption in terms of our forecast and guidance around the model. But obviously, there's we think significant upside around a potential larger acquisition. And this is a product within a category where we certainly make some larger folks. And so I'd be interested in this asset because it's the first significant innovation in the maintenance of COPD in a long time, not so and that makes sense.

Lawrence Solow

And then just lastly, can you just remind us how many shares of VKTX. you guys have currently?

Todd Davis

We still hold about 1.7 million shares of Viking Therapeutics.

Lawrence Solow

Got it. Okay.
I appreciate that. Thanks, Todd.

Operator

Thank you. As a reminder, if any teleconference participant would like to ask a question, please press star followed by the one on your telephone keypad. Our next question comes from the line of Balaji Prasad of Barclays. Please go ahead.

Balaji Prasad

Hi, good morning. This is Charles for biologics. Thanks for taking our question. Just a quick one on Riley. Could you add a little bit more color more color on your comments with regard to the supply constraints? And could you also share your view on the short-term and the long-term revenue ramp-up for these assets and the implications for Ligand's portfolio. Thank you so much.

Matt Korenberg

Thanks. And as folks know, Rylaze is marketed by Jazz, our marketing partner, the supply constraints we were referring to in my prepared comments were really related to the predecessor product on Jazz and Pelican or Phoenix, our prior technology platform collaborated to develop Rylaze to solve those manufacturing problems historically. And so that those are all resolved now and the new product is fully available as much as needed from a manufacturing standpoint in terms of projections for the product or comments on the product's potential, and we only can report what our partners report and Jazz did not provide guidance for Rylaze. I'd point folks to the publicly reported consensus estimates for the product, but last year, the product did about $400 million, a little bit less, I think, for the year, and we hope to see growth given that Jazz highlighted that as one of its three key growth drivers.

Balaji Prasad

Got it. Thanks.

Operator

There are no further questions at this time. Thank you. Ladies and gentlemen, we will conclude today's conference call. We thank you for participating. You may now disconnect.